Is this property transfer to Daughter possible?

[Mapara]

Hi i'm wonder if this scenario will work or make sense.
I want to transfer ownership of our PPR to our only Daughter 50% by way of gift and 50% by way of a loan/sale to be paid back . Basicaly full ownership would be transfered and i would receive 50% of the todays market value over time.
E.g.
PPR VALUE 400k
Gift 200k
Loan 200k
What tax implication might arise.

 

[NoRegretsCoyote]

This is feasible. There are no tax implications if you give her a loan that only has to be paid back at deposit rates, so basically zero at the moment.

You will both need separate solicitors for this. There is stamp duty as well on the market value of the transaction.

The "gift" part of the transaction will count against her lifetime inheritance tax exemption of €335k.

 

[Baby boomer]

Can I suggest a small modification that might be more tax efficient? I'm assuming that that as she's an only daughter she will in due course inherit all or most of your estate. In that case, assuming some other assets in the estate, she will be liable for CAT on the excess over the lifetime limit of €335k.

You could tweak the amounts so that, for example, she gets 100k as a gift and 300k as a repayable loan. You then give a gift of 3k to her each year by way of a 3k write-off of the loan. This 3k per year is exempt from CAT and doesn't count towards her lifetime limit. Your spouse can also give a 3k write-off to your daughter as an annual gift. So after 17 years, you've achieved what you wanted - a gift to her of 200k value, at no cost to you, and you've saved her 33k in future CAT liability.

If she's married you can accelerate this by doing th same each year for her spouse.

So rather than gifting property now, that eats into the CAT threshold, you can drip-feed it at a rate of 3k, 6k or 12k pa without any tax implication.

 

[Mapara]

Just to clarify, yes she is an only child,also is the value of the property decided at the time of the initial transfer?

You then give a gift of 3k to her each year by way of a 3k write-off of the loan.

So how exactly the does 3k write off of loan operate is it the fact i can gift her 3k a year and she can the gift it back to me.

 

[Baby boomer]

Just to clarify, yes she is an only child,also is the value of the property decided at the time of the initial transfer?

Yes. Value is taken at date of transfer.

So how exactly the does 3k write off of loan operate is it the fact i can gift her 3k a year and she can the gift it back to me.

Well, yes, you could gift her 3k and she could immediately give it back to you as a partial repayment of the loan. That certainly would work. Or you could just write her a letter telling her you are forgiving or writing off 3k of the debt.

Either way, make sure you document what you're doing so that it's crystal clear if Revenue ask questions. You will need a solicitor anyway to do the conveyancing so you should really get him/her to do the loan agreement and documentation also.

A little expense now might save a lot later on.

 

[5stars]

Hi, sorry for jumping in here but we are in the same situation.
I have 2 daughters, one of which is buying one of our houses She is paying the mortgage to us by rent for the last 10 years. She is married and has one child.
The gift letter which we have to write is for 190000.
What can we do to avoid any tax indication now and in the future.
Thank you